Lennox International Inc. (NYSE:LII) posted better-than-expected third-quarter earnings on Wednesday, even as revenue came in below estimates, reflecting the impact of macroeconomic headwinds and a refrigerant transition year.
Adjusted earnings per share for the quarter reached $6.98, slightly ahead of analyst expectations of $6.93. Revenue totaled $1.43 billion, falling short of the $1.5 billion consensus and marking a 5% year-over-year decline.
CEO Alok Maskara called 2025 a “transitional year” but highlighted the company’s ability to protect profitability despite the revenue dip. Segment profit rose 2% to $310 million, while margins expanded 150 basis points to 21.7%.
“During these uncertain times, the Lennox team continues to respond with agility and discipline, delivering margin expansion in both segments,” said Maskara. “The recent DuroDyne and Supco acquisition strengthens our parts and accessories portfolio, positioning us for greater success during the more normalized operating environment expected in 2026 and beyond.”
The Home Comfort Solutions segment was the weakest performer, with revenue down 12% amid channel destocking and a softer summer season. Still, cost control helped margins improve by 30 basis points. In contrast, the Building Climate Solutions segment delivered 10% revenue growth and expanded margins by 330 basis points thanks to stronger manufacturing output and better factory efficiency.
Lennox trimmed its full-year outlook, now forecasting a 1% revenue decline and adjusted EPS between $22.75 and $23.25, slightly below the $23.37 analyst consensus. The company also lowered its free cash flow projection to about $550 million, citing temporarily higher inventory levels.
Operating cash flow fell to $301 million from $452 million in the prior year, while Lennox repurchased $37 million worth of stock during the quarter.